The first draft of the Renters Reform Bill published on 17 May 2023 contained wording to abolish Section 21. We may still be waiting for the first parliamentary debate on the Bill, but there’s no sign of the government backtracking on Section 21.
Assuming the abolition of Section 21 passes into law, what is it likely to mean for both private landlords and renters?
Removing a landlord’s flexibility to terminate tenancy agreements with two months’ notice, without needing to give a reason (it doesn’t mean there isn’t one), will cause a profound upheaval in the private rented sector.
Yes, it will (eventually) give renters more security. However, it will concentrate the minds of landlords as to whether they want to sell up. It will also change the way landlords operate in the future. This change may have well negative unintended consequences for renters.
In this blog post, I look at the likely implications of abolishing Section 21 for landlords and renters. I also set out the probable timelines for implementation of the Renters Reform Bill, including latest news on the earliest that Section 21 is likely to be abolished.
Last updated: 20 August 2023
Abolishing Section 21 at a glance
FAQ on Section 21
For those who want a quick answer to the most popular questions, here’s my FAQ on the abolition of Section 21:
What is Section 21?
Section 21 of the Housing Act 1988 gives the right for a landlord to terminate a tenancy agreement and obtain possession of a property by serving on the tenants a Section 21 Notice, on Form 6A.
It’s often called a “no fault” eviction notice, as the landlord doesn’t need to give a reason for terminating the tenancy. It’s due to be abolished under the Renters Reform Bill.
When will Section 21 be abolished?
Royal Assent for the Renters Reform Bill is unlikely to take place before the end of the first quarter of 2024 due to the delay of the second reading debate.
Consequently, the earliest that Section 21 will be abolished is 18 months after Royal Assent. This means some time after October 2025, and possibly 2026.
Is a Section 21 Notice still valid in 2023?
Yes, landlords can still valid serve Section 21 Notices on renters. This is because the Renters Reform Bill has not yet come into force. However, for the Section 21 Notice to be valid, the landlord must have complied with their obligations, for instance regarding the tenant’s deposit and safety certification and it’s not during a fixed term tenancy agreement without a break clause.
>> Related Post: How to serve a valid Section 21 Notice
Has Section 21 been abolished?
No, Section 21 has not yet been abolished. The Renters Reform Bill is still on its journey through parliament. Section 21 won’t be abolished or scrapped until the Bill becomes an Act, and then the part regarding the scrapping of Section 21 will need to come into force.
In other words, Section 21 won’t be abolished until October 2025 at the earliest, and largely depends on what happens to the Bill as it passes through parliament.
>> Related Post: Renters Reform Timetable: What Happens When
How will landlords be able to evict tenants when Section 21 is abolished?
In order to evict tenants after the end of Section 21, landlords will need to use the revised Section 8 Grounds for Possession. Here’s a link to my guide to the new Section 8 Grounds for Possession.
What does the Renters Reform Bill say about abolishing Section 21?
It’s actually quite easy to miss the abolition of Section 21 in the Renters Reform Bill. A word search for “21” comes up blank.
However, s2(a) Renters Reform Bill proposes removing Section 21 from the Housing Act 1988 as part of abolishing Assured Shorthold Tenancies, and deleting Chapter 2, Part I of the 1988 Act, including Section 21 along with it. This will abolish Section 21 if and when it comes into force.
Assuming the Renters Reform Bill is implemented, the only way landlords will be able to terminate tenancy agreements, will be by using the revised Section 8 Grounds for Possession.
New Section 8 Grounds for Possession
Instead of Section 21, landlords will only be able to use the existing Section 8 framework. I have written a detailed but practical blog post on how the new consolidated Section 8 will work in practice for landlords. However, here is a brief overview of the key new Grounds for Possession:
New Mandatory Ground: Repeated serious arrears
- A landlord would be able to serve a Section 8 notice if the tenant has been in at least two months’ rent arrears three times for at least one day within the previous three years. It would still apply if the renters are no longer in arrears at the hearing.
- The draft specifically excludes arrears due to delays from the payment of Universal Credit.
- Landlords wouldn’t be able to use this new ground to evict renters if the arrears stay under two months’ rent.
Revised Mandatory Ground: Landlord or close family member moving in
- Landlords will be able to serve two months’ notice to sell or move close family members into the property. However, they wouldn’t be able to do this in the first six months of a tenancy.
- The landlord must intend it to be their (or their family member’s) only or principal home. The landlord’s family includes their spouse/partner, and their respective parents, grandparents, siblings, and grandchildren. It doesn’t include nieces, nephews etc.
New Mandatory Ground: Sale of property
- A landlord can only this ground if the tenancy has lasted more than 6 months.
- Landlord must intend to sell the property.
Revised Discretionary Ground: Anti-social Behaviour
- The Anti-social Behaviour Action Plan published by the government on 27 March 2023 gave cause for optimism that Ground 14 will be amended to make it easier for landlords to evict tenants for behaviour that falls short of criminal anti-social behaviour.
- In the end, the new wording was a damp squib. The proposal is to change the wording from guilty of “behaviour causing or likely to cause nuisance or annoyance” to “capable of causing“.
- I’m not sure there’s much a significant difference between the two, even if the guidance claims this will make ASB easier to demonstrate. In any event, it’s a discretionary ground, so a judge will decide whether it’s reasonable to evict the tenant because of their behaviour.
- It’ll also be a lot costlier going to court, instead of the easy Section 21.
- Click here for my blog post which explains in detail how landlords will be able to evict tenants with anti-social behaviour using the revised Grounds 7A and 14.
Landlords will also be able to use the existing Section 8 Grounds for Possession.
For tables showing what the Section 8 Grounds for Possession will look like after the Renters Reform Bill comes into force, click here: Making sense of the new Section 8 Grounds for Possession.
Here’s a full guide on how landlords will be able to use the revised Section 8 Grounds for Possession, once they come into effect: Terminating Tenancies with the new Section 8.
When will Section 21 Notices be abolished?
Now the Renters Reform Bill is going through parliament, we can take some educated guesses about the likely timetable for scrapping the ability of landlords to use Section 21 notices.
As the Bill won’t now pass in the 2022-23 parliamentary session, what is the timeline for abolishing Section 21?
The answer lies in the White Paper, A Fairer Private Rented Sector. The White Paper promises to “allow time for a smooth transition to the new system”, and it mentions two key dates:
- First implementation date (at least six months after Royal Assent). The new rules would apply to new tenancies, which will all be automatically periodic.
- Second implementation date (at least 12 months after the first). All existing tenancies would transition to the new system. At this point, Section 21 would cease to apply to all renters on this date, whether or not their tenancy is already in place.
The Bill retains these two different dates, referring to a “commencement date” and an “extended application date”.
Since the Renters Reform Bill was published on 17 May, apart from a bit of speculation in the press, there’s been tumbleweed. We’re still waiting for the date of the second reading debate to be set, and now won’t take place until parliament gets back after the summer.
As a result, the second reading will take place in October or November. Far from being over by Christmas, as Michael Gove claimed, this would mean the Bill would need to roll over into the next parliamentary session, and not receive Royal Assent until sometime in 2024.
Given the complexity and controversial nature of the Bill, its journey through parliament will not be quick. It’s therefore likely that the abolition of Section 21 Notices won’t happen until late 2025 or even 2026.
This means that Section 21 Notices will continue to be valid and “no fault” evictions won’t be banned until the Renters Reform Bill comes into force. This means Landlords can still use Section 21 Notices to evict tenants as the new law to abolish “no-fault” evictions won’t come into effect until a date in (probably) 2026.
Click here for a detailed look at the timetable for the implementation of the Renters Reform Bill, and how I came to this date, based on the information available as of 22 September 2023.
Likely short-term consequences of abolishing s21
Research by the NRLA published in February 2023 found that 30% of landlords planned to reduce the size of their portfolio in 2023.
Now it’s clear that Section 21 will be scrapped, the remaining landlords are faced with a number of choices:
Sell up or stay?
- An increase in landlords selling is likely to lead to more evictions in the short term. Why? Landlords usually receive more money if they sell with vacant possession. It’s also easier to sell without renters, for instance arranging viewings and redecorating the property for sale.
- It will become more difficult to sell a rental property after the abolition of Section 21. Consequently, the approaching end of Section 21 is likely to concentrate the minds of any wavering landlords. This could have the opposite effect of the end of a temporary reduction in stamp duty, which leads to a surge of property purchases.
Dealing with “problem renters”
- Landlords often use Section 21 to evict “problem” renters. They might be regularly late with rent, but not two months behind. Or their behaviour may fall short of “serious” anti-social behaviour. For instance, they might not be looking after the property well, or they’re in breach of the tenancy agreement. The landlords might be able to use Section 8 grounds, but choose Section 21 because it’s quicker and easier.
- However, Section 21 has allowed landlords to give renters the benefit of the doubt, knowing they can terminate if it doesn’t work out.
- That said, as it would become more difficult to evict tenants, landlords are likely to try to lower risk in the interim period, by being less willing to give renters the benefit of the doubt.
- This may lead to an increase in evictions in the run up to 2026 as landlords will want to reduce risk before the rules change.
Likely long-term consequences of abolishing s21
Although abolishing Section 21 will give renters more security, it’s likely to change the way that landlords select renters. Landlords are likely to become more risk adverse when choosing tenants as they know it will be costly and time-consuming to rely on Section 8 to evict problematic tenants.
Without the safety net of Section 21, and having to rely on over-stretched courts to use the Section 8 grounds of possession, landlords will be reluctant to take risks on affordability. Renters on low incomes and zero-hours contracts may find it increasingly difficult to rent without a guarantor. Anyone without a squeaky clean credit history may find it hard to find somewhere to rent.
Unless there is more social housing, increased prudence on the part of landlords, and an increase in landlords selling up, all promise to increase the shortage of private rental properties.
Final thoughts
The Renters’ Reform Bill will profoundly change the relationship between landlord and renter in England. By and large, giving renters more security is good for wider society, and it’s something I personally support.
However, although the reforms are unlikely to make a difference in practice where the relationship is already positive, and the landlord gets a fair return for their investment, ending Section 21 will make all landlords more cautious when choosing renters. Particularly if the court system is not reformed so it is fit for handling Section 8 orders for possesion.
Although the scrapping of the requirements for landlords to have an EPC C gives landlords one less thing to worry about, the high tax caused by Section 24, combined with worries about the Renters Reform Bill, may cause more landlords to call it a day.
I will keep this blog post updated.
You may also find useful
- Renters Reform Bill Hub
- 7 Ways for Landlords to Improve the Bottom Line
- The 10 Key Changes in the Renters Reform Bill
- Terminating tenancies with the new Section 8
- How to sell your buy to let
- How to terminate a tenancy under Section 8
- Landlord Essentials: What landlords need for buy to lets
- Is passive income a myth for landlords?
- How to terminate a tenancy under Section 21
- How to be a pet friendly landlord
- Landlord guide to increasing rent
